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paradox

This topic has 2 expert replies and 0 member replies
vaibhav101 Senior | Next Rank: 100 Posts Default Avatar
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paradox

Post Mon Dec 04, 2017 7:00 am
Between 2001 and 2010, ABC Foods limited increased its revenues by 300%, and its net profits by 125%. ABC Foods is one of the three packaged food companies in the country of Tria. There are no other packaged food companies in Tria and ABC Foods has no other business. Analysts though, are not impressed by this growth, because in the same decade, the market share of ABC Foods limited has reduced by 20%, from 25% to 20% overall.

Which of the following, if true, helps explain the loss in the market share of ABC Foods despite its increase in revenues and profits?

A ABC Foods limited was involved in multiple lawsuits over these 10 years where it had to payout huge sums as penalties.
B ABC Foods limited is majorly involved with local varieties while its competitors have both local and international varieties.
C Both the competitors of ABC Foods limited increased its revenues by a greater percentage than ABC.
D At least one of the competitors of ABC Foods limited increased its profits by twice as much as ABC Foods did.
E Due to problem at one of its manufacturing units, ABC Foods limited had to cut down its production by one-third.

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Post Mon Dec 04, 2017 7:32 am
See here for an official question that tests a similar concept: http://www.beatthegmat.com/weaken-problem-percentage-retire-in-fl-t152334.html

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Post Mon Dec 04, 2017 7:30 am
vaibhav101 wrote:
Between 2001 and 2010, ABC Foods limited increased its revenues by 300%, and its net profits by 125%. ABC Foods is one of the three packaged food companies in the country of Tria. There are no other packaged food companies in Tria and ABC Foods has no other business. Analysts though, are not impressed by this growth, because in the same decade, the market share of ABC Foods limited has reduced by 20%, from 25% to 20% overall.

Which of the following, if true, helps explain the loss in the market share of ABC Foods despite its increase in revenues and profits?

A ABC Foods limited was involved in multiple lawsuits over these 10 years where it had to payout huge sums as penalties.
B ABC Foods limited is majorly involved with local varieties while its competitors have both local and international varieties.
C Both the competitors of ABC Foods limited increased its revenues by a greater percentage than ABC.
D At least one of the competitors of ABC Foods limited increased its profits by twice as much as ABC Foods did.
E Due to problem at one of its manufacturing units, ABC Foods limited had to cut down its production by one-third.
We're presented with the following:

ABC's revenues are up, but its market share is down.
How can that happen? Well, if the overall market increased dramatically, then it's possible to increase revenues as you lose market share. This is what C gives us.

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